Public Companies Now Allowed PPAs for Strategic Energy Projects

12-07-2019

The news was anticipated by this paper last June, following the progress that the Cauchari project in Jujuy had alongside the Eximbank of China, securing a $200-million-dollar loan to expand a solar park by 200 MW.

The governor from Jujuy, Gerardo Morales, needed this legal tool in order to continues with the neotiations during his trip to China, which are currently underway, and which will eventually make clear that this announcement wasn’t chance.

Decree 476/2019 technically laid the foundations: “it is convenient to contemplate the possibility, exception, of that which is celebrated by storage contracts for renewable energy with state-owned copanies—be them national, provincial of from the City of Buenos Aires—or with satelitte companies that are exclusive property—they will always be the sole project owner with respect to investment.”

The regulation clarifies that this is feasible as they are “members of the public sector and access financing under certain circumstations, with investment from the national government, for crediting operations negotiated directly by the provinces of the City of Buenos Aires, and that they deal with investment projects with a significant impact on local development.”

At the same time, the government looks to avoid speculations and problems of corruption in the future, and to this end they added a clause explicitly: “in these cases, the cessation, subcontracting must be impeded and the contract signed over to a third party.”

How will the negotiations over price be? According to the decree, they will be “resulting from the competetive proceedings that were called previously by the Application Authority and the characteristics of the project in relation, with the end of assimilating the market price.”

In this sense, the decree adds that “the proceedings of competetive public contracting that develops, with regards to each type of technology, must progress in a manner that favors the lowest prices and quickest installation times.”

Either directly or indirectly, the government has given the green light to Cauchari and other companies to take on plant expansions and new developments for renewable projects on a case by case basis. The Arauco Wind Farm, among others, is supported with a little financial infrastructure

and hard work in order for it to comply with its requirements.

“The decree is aimed at public entities and businesses. YPF is a private company with state participation,” explained a respected source regarding the main petrol company in the country that is controlled 51% by the state (stock). Another government rep confirmed off the record that “YPF cannot participate,” under this new scheme.

It is worth remember that the government left the old Resolution 108 as soon as it took office, as it was used by the previous administration, as it was considered arbitrary. In difference to the current decree, the 108 controlled contracts with private entities.

Such is not the case currently, even though the door for direct conversation with local companies associated with investors from abroad, or with new public signatures that the provinces could create.

Autor
Gastón Fenés
Fuente
Energía Estratégica